Considering the amount of hotel and multi-family housing (think apartments, condos, senior housing) projects we have flooding our offices these days (we do work in 42 different States, several thousand units a month) - I'm quite confident we have a solid couple years of housing growth ahead of us.

The WSJ article pointed out that even if they continue to pay dividends to the US, they can NEVER get out of debt to the US because of the way it was structured.

FTFA (WSJ):Even if Fannie and Freddie ultimately did remit enough in dividends to repay the amounts borrowed from the government, they would still owe the government money. That is because the terms of their government support don't actually provide a mechanism for them to buy back the preferred shares that the government has taken.In that sense, Fannie and Freddie are simply making interest payments on a loan that can't formally be paid off.

Um, that's a corporation making money off a government program. The "profit" comes from taxpayers -- or more accurately, consumers. They are buying real estate debt from banks. If they're making "record" profits, that means the real estate bubble's back. You know, the same one that almost resulted in global economic meltdown. Why is this a good thing?

It's not a for/against thing. Nor is it an ideology thing. It's the stupidity of declaring an unprecedented flow of money "good news" without thinking about where it's coming from and why it should flow that way. It's not like Fannie Mae is some family-owned hardware store.

Rustico:The WSJ article pointed out that even if they continue to pay dividends to the US, they can NEVER get out of debt to the US because of the way it was structured.

FTFA (WSJ):Even if Fannie and Freddie ultimately did remit enough in dividends to repay the amounts borrowed from the government, they would still owe the government money. That is because the terms of their government support don't actually provide a mechanism for them to buy back the preferred shares that the government has taken.In that sense, Fannie and Freddie are simply making interest payments on a loan that can't formally be paid off.

Lost Thought 00:Rustico: The WSJ article pointed out that even if they continue to pay dividends to the US, they can NEVER get out of debt to the US because of the way it was structured.

FTFA (WSJ):Even if Fannie and Freddie ultimately did remit enough in dividends to repay the amounts borrowed from the government, they would still owe the government money. That is because the terms of their government support don't actually provide a mechanism for them to buy back the preferred shares that the government has taken.In that sense, Fannie and Freddie are simply making interest payments on a loan that can't formally be paid off.

It's interesting that their profits are booming since they recently got rid of their bonus program and switched over to a guaranteed pay structure. Maybe other large financial institutions will take notice that you can make an obscene profit without having to incentivize short term profit seeking via absurd bonus programs.

Communist_Manifesto:It's interesting that their profits are booming since they recently got rid of their bonus program and switched over to a guaranteed pay structure. Maybe other large financial institutions will take notice that you can make an obscene profit without having to incentivize short term profit seeking via absurd bonus programs.

in 2008 Credit Suisse took all of the toxic crap off its balance sheet and into the bonus pool for employees, which they can't claim until 2016.

created a rare win-win. Credit Suisse got through the crisis without a public bailout, and employees have an 80% return waiting for them.

Frankentots:FTA: ...it opens the way for the company to use an accounting treatment to reinstate past tax credits worth $59.8 billion in its balance sheet, which it can use to repay the government.

They owe us $120 billion, but let's give them $60 billion in tax credits.

How exactly does this work?

the tax credits are from before the bailout. the reinstatement of them would leave the US government on a much smaller hook if Fannie mae needed to be bailed out again for some reason, and the asset gain would lead to a dividend that goes right to taxpayers.

From the WSJ:

Reversing the write-downs of those so-called deferred tax assets would increase Fannie Mae's net worth, the vast majority of which would go to the U.S. Treasury as a dividend payment.

Bought a Fannie Mae property as my first home just a few months ago, they were real *&%@'s to deal with. Their contractor botched a maintenance job after I'd purchased the home while waiting to close and I had to delay three months for them to approve a 2 day work job (thus costing them three more months of taxes/upkeep on the home). Then they still screwed up the job and had to come back. Flooring, how the heck does it work?

Lose some bureaucracy and realize they're costing themselves money at every turn by not having any idea what to do in the housing market.

Housing will be farked for years to come. Still fark loads of shadow inventory, still fark loads of foreclosures in judicial foreclosure States, still fark loads of inventory bought by "investment" wannabes thinking it is just a matter of months before in all goes back to 2003. Only thing selling houses now are markets in which the rental companies have found the top of what people will pay for rent, it will slide back down.

Apeboy:Housing will be farked for years to come. Still fark loads of shadow inventory, still fark loads of foreclosures in judicial foreclosure States, still fark loads of inventory bought by "investment" wannabes thinking it is just a matter of months before in all goes back to 2003. Only thing selling houses now are markets in which the rental companies have found the top of what people will pay for rent, it will slide back down.

Not really. The big banks have sold off the underperforming loans as bundles to more "specialized" servicers for around 30% of the book value. Those "specialized" services can (and have) worked with the borrowers to restructure the loans - HAMP 2.0 has been a huge win for the borrowers that had their loan upside down.

While it is true that a lot of homes have been bought up by investors and they can all decide to cash in at the same time and put the houses for sale thus creating a ton of inventory, there isn't a lot of shadow inventory at the moment. The difference is that the investors that have bought recently have bought with cash vs 100% financing as they did during the bubble. Oh, and they're smart this time around and have incorportated their investment business so it's not real estate loans that they have but corporate loans.

ddam:Apeboy: Housing will be farked for years to come. Still fark loads of shadow inventory, still fark loads of foreclosures in judicial foreclosure States, still fark loads of inventory bought by "investment" wannabes thinking it is just a matter of months before in all goes back to 2003. Only thing selling houses now are markets in which the rental companies have found the top of what people will pay for rent, it will slide back down.

Not really. The big banks have sold off the underperforming loans as bundles to more "specialized" servicers for around 30% of the book value. Those "specialized" services can (and have) worked with the borrowers to restructure the loans - HAMP 2.0 has been a huge win for the borrowers that had their loan upside down.

While it is true that a lot of homes have been bought up by investors and they can all decide to cash in at the same time and put the houses for sale thus creating a ton of inventory, there isn't a lot of shadow inventory at the moment. The difference is that the investors that have bought recently have bought with cash vs 100% financing as they did during the bubble. Oh, and they're smart this time around and have incorportated their investment business so it's not real estate loans that they have but corporate loans.

The cash part is somewhat misleading. Yes, companies are buying homes with cash, mainly because the sale goes much, much faster. But even a rental house is a terrible investment to wholly own. What you do is actually take out a mortgage, usually for 80 percent of appraised value (usually the max without having to pay PMI, also depends on how much time a company wants to spend with paperwork for bridge loans).

That frees up cash to invest elsewhere/buy more houses. It's why I generally refi my rental properties when they hit about 50 percent LTV. There's several reasons for doing this, the two big ones are mainly taxes and finding higher returns, which isn't too difficult to do right now.

You can cash out refi a rental for 30 years right now at about 3.4 percent or so and drop the money in AT&T and get a 5 percent return. Not a great spread, but pretty safe especially if the rent covers the note.

"hey, you owe us $30BN, but guess what? We just gave you a $30BN tax credit so now we are square! Hey look America, they paid us back! With interest!"

It's a little disingenuous to present it that way when you consider the total savings the country gets from not financially decimating an entire state which is what would have happened had GM gone out of business. Now you have people staying employed and paying taxes and mortgages instead of the alternative. Win win win.

JohnBigBootay:It's a little disingenuous to present it that way when you consider the total savings the country gets from not financially decimating an entire state which is what would have happened had GM gone out of business. Now you have people staying employed and paying taxes and mortgages instead of the alternative. Win win win.

You do realize then when the government taxes people in Arizona to keep a GM plant open in Michigan that the car worker who has a paycheck only has it at the expense of a hundred people in AZ who have lighter paychecks and less money to spend. All government can do is take money from one sector of the economy and move it to another.

Companies go through lawful bankruptcy all the time and it doesn't mean that the place is getting burned to the ground. Some of GM's successful brands might have lived on and been more profitable than they are now. Other healthier companies may have bought plants and assembly lines, employing those same workers. Nobody knows for sure but the people who argued for the auto bailouts...they know everything.

GM would die on the vine without govt fleet purchases, Dept of energy credits and the government owning 26% of it.

o5iiawah:JohnBigBootay: It's a little disingenuous to present it that way when you consider the total savings the country gets from not financially decimating an entire state which is what would have happened had GM gone out of business. Now you have people staying employed and paying taxes and mortgages instead of the alternative. Win win win.

You do realize then when the government taxes people in Arizona to keep a GM plant open in Michigan that the car worker who has a paycheck only has it at the expense of a hundred people in AZ who have lighter paychecks and less money to spend. All government can do is take money from one sector of the economy and move it to another.

Companies go through lawful bankruptcy all the time and it doesn't mean that the place is getting burned to the ground. Some of GM's successful brands might have lived on and been more profitable than they are now. Other healthier companies may have bought plants and assembly lines, employing those same workers. Nobody knows for sure but the people who argued for the auto bailouts...they know everything.

GM would die on the vine without govt fleet purchases, Dept of energy credits and the government owning 26% of it.

Arizona is receives far more in federal spending than what its residents pay in federal taxes.

the United States is a fiscal transfer union: perpetual hidden bailouts for most of the country, on the back of a handful of states (NY, CA, Texas, etc)

o5iiawah:Companies go through lawful bankruptcy all the time and it doesn't mean that the place is getting burned to the ground. Some of GM's successful brands might have lived on and been more profitable than they are now. Other healthier companies may have bought plants and assembly lines, employing those same workers. Nobody knows for sure but the people who argued for the auto bailouts...they know everything.

If it had been GM alone in the situation, then what you say might have been true. The problem is that it was the entire American auto industry that was in cardiac arrest. They were all on the verge of failure, including Ford which, although it didn't take bailout money, heartily supported the ability of its competitors to remain viable because it knew that if GM and Chrysler failed that they would be right behind. Bankruptcy of such massive companies would not have been clean in the 2008-2009 time period because there wasn't the available capital to effect a purchase of the assets and it wouldn't be possible to break up the assets into bite-sized chunks while retaining economies of scale.

The result of not doing a bailout would have been the failure of American automotive manufacturing as a whole: Parts suppliers, dealerships, tire companies, automotive transport trucking, Catastrophe doesn't begin to describe it. Even if we end up on the hook for 10 billion, it's a small price to pay given the alternative.

Stile4aly:o5iiawah: Companies go through lawful bankruptcy all the time and it doesn't mean that the place is getting burned to the ground. Some of GM's successful brands might have lived on and been more profitable than they are now. Other healthier companies may have bought plants and assembly lines, employing those same workers. Nobody knows for sure but the people who argued for the auto bailouts...they know everything.

If it had been GM alone in the situation, then what you say might have been true. The problem is that it was the entire American auto industry that was in cardiac arrest. They were all on the verge of failure, including Ford which, although it didn't take bailout money, heartily supported the ability of its competitors to remain viable because it knew that if GM and Chrysler failed that they would be right behind. Bankruptcy of such massive companies would not have been clean in the 2008-2009 time period because there wasn't the available capital to effect a purchase of the assets and it wouldn't be possible to break up the assets into bite-sized chunks while retaining economies of scale.

The result of not doing a bailout would have been the failure of American automotive manufacturing as a whole: Parts suppliers, dealerships, tire companies, automotive transport trucking, Catastrophe doesn't begin to describe it. Even if we end up on the hook for 10 billion, it's a small price to pay given the alternative.

You forgot to mention, Ford parts suppliers also supplied GM and Chrysler, if GM and Chrysler went down, so did their suppliers, and therefore ford.

Also, Ford didn't need the bailout as much, because they got a loan before the banks went under and couldn't give loans.

ALSO, they were all competing against foreign auto companies that ALL got bailouts.

Basically, o5iiawah doesn't have a farking clue about what he's talking about. He sound's very Republican.

o5iiawah:JohnBigBootay: It's a little disingenuous to present it that way when you consider the total savings the country gets from not financially decimating an entire state which is what would have happened had GM gone out of business. Now you have people staying employed and paying taxes and mortgages instead of the alternative. Win win win.

You do realize then when the government taxes people in Arizona to keep a GM plant open in Michigan that the car worker who has a paycheck only has it at the expense of a hundred people in AZ who have lighter paychecks and less money to spend. All government can do is take money from one sector of the economy and move it to another.

Companies go through lawful bankruptcy all the time and it doesn't mean that the place is getting burned to the ground. Some of GM's successful brands might have lived on and been more profitable than they are now. Other healthier companies may have bought plants and assembly lines, employing those same workers. Nobody knows for sure but the people who argued for the auto bailouts...they know everything.

GM would die on the vine without govt fleet purchases, Dept of energy credits and the government owning 26% of it.

Except any of the Big Three would have destroyed the entire automotive industry. No supplier could lose a customer like that and the entire supply chain is so intertwined that it would take years if not more for there to be any recovery. Anyone who has worked in the auto industry understands that.

GM went through a structured bankruptcy, as did Chrysler. When Chrysler exited bankruptcy it emerged as a division of Fiat, when GM exited bankruptcy it emerged as an independent entity. I don't understand why this fact escapes so many people except that they so hate the unions that they wanted to see the companies competely disbanded rather than salvaged.

NO OTHER COUNTRY WOULD THINK OF LETTING THEIR INDUSTRIAL SECTOR BURN LIKE THAT. I can't stress that enough. This notion that we should just let a sector of the economy collapse "for the good of the country" or whatever is willful ignorance. Our companies compete against companies around the world that are subsidized by their respective governments whenever they start teetering. Look at Kia and Daewoo, which went through their own crises a few years back. They were reorganized by the Korean government, with Daewoo made into a divison of Kia. Look at Sweden, whose banks went under a few years ago. The government stepped in, purchased their stock, fired everyone involved, and then made the banks repurchase their independence one share at a time. Governments ensure that their major employers and economic foundations keep going no matter what. That is a role of a modern government, even if fiscal conservatives find it a cardinal sin.

impaler:Basically, o5iiawah doesn't have a farking clue about what he's talking about. He sound's very Republican.

more like people like you have swallowed every progressive talking point on the issue. If there's an aggregate demand for vehicles and the level of employment cant sustain the demand, the government only hurts the economy more when they direct private funds to support unproductive means.

The entire country collapsing is a goddamn lie and a myth. Penske wanted to buy a GM truck plant. Ford didn't need the bailout at all. The only reason the parts supply chain exists is via government propping up the industry. At a certain point, we have to come to a realization that the horse and buggy, typewriter and 8-tracks are not viable market products and let them go. GM doesn't have to innovate, develop or compete when they get access to public funds, regulatory graces and customers that other companies dont have.

Like I said, everyone has chimed in to say the entire country's economy would have collapsed even though nobody knows what would have happened. Regardless, the auto industry, or GM at least cant sustain itself in a free market

BolloxReader:That is a role of a modern government, even if fiscal conservatives find it a cardinal sin.

Completely an entirely your opinion and what Sweden or Korea does with their business is entirely up to them. The role of our government is to enforce contracts and manage bankruptcy. With GM, they did neither.

o5iiawah:more like people like you have swallowed every progressive talking point on the issue.

You can't dispute the well -known facts on the issue, so you just say they're "progressive talking points," as if that's an argument.

----If there's an aggregate demand for vehicles and the level of employment cant sustain the demand, the government only hurts the economy more when they direct private funds to support unproductive means. [citation needed]

That makes no sense if the the aggregate demand is temporarily low due to economic recession.

----The only reason the parts supply chain exists is via government propping up the industry. [citation needed]

----At a certain point, we have to come to a realization that the horse and buggy, typewriter and 8-tracks are not viable market products and let them go. GM doesn't have to innovate, develop or compete when they get access to public funds, regulatory graces and customers that other companies dont have.

Newsflash: people still buy cars. A lot of them. They're making a good profit now too, basically disproving everything you're trying to argue. And I see you didn't even bother to read what I said, with your: "Ford didn't need the bailout at all... GM doesn't have to innovate, develop or compete when they get access to public funds, regulatory graces and customers that other companies dont have." Ford got a loan before the banks were too insolvent to give loans, and nearly every single automobile company on the planet got government aid from their respective governments.

When you can't even reason using well-known undisputed facts, it's no wonder your conclusions are so wrong-headed.

I bought a couple thousand shares of Fannie and Freddie when it was .50. It's a total bet. At worst I lose the $2k I put in, at best it comes back up to a couple bucks and I lucked out. I know, but at the same time I bought GE, Citibank and AiG, cashed in on everything but GE and made a couple bucks.

Speculating on what may have happened to an industry or sector of the economy is just that - speculating. There were plenty of people a week before Facebook went public who were ranting and screaming for people to get on board that they would be the next millionaries. Nobody can predict how 300,000,000 people are going to behave in a market - thats why governments are historically horrible at predicting its outcome.

impaler:That makes no sense if the the aggregate demand is temporarily low due to economic recession.

No, my argument is that if there isn't enough demand for cars in a free market than the supply chain ought to contract accordingly.

impaler:Newsflash: people still buy cars. A lot of them. They're making a good profit now too, basically disproving everything you're trying to argue.

Wow, thats your argument? "People buy a lot of cars?"

Sure they do - they are just not buying GM and Chrysler as much as they are buying other brands. To offset this, the government still maintains an ownership stake in GM, provides them tax credits and makes large fleet purchases. - otherwise known as crony socialism.

See, if GM was roaring back, it wouldn't have a board hand-picked by the government, be 26% owned by the government and could exist on its own without DoE credits and DHS fleet sales.